HOW TO CHOOSE RIGHT BROKERAGE FIRM???
For any stock market investor or trader choosing a right brokerage firm is an important step in trading.Choice of Brokerage needs some homework and the first step in completing that homework should be asking yourself questions about your finances, knowledge, needs, and investment plan. there are different types of brokerage firms offering broking services in the market.
Types of Brokerage Firm
Full-Service Brokerage Firms
They offer the most services, but commissions and fees are the highest. They are known for their extensive research, exclusive advice, as well as a full range of other financial services. This type of firm may require a higher minimum investment to open an account. A dedicated stock broker handles the client's account and get paid mostly through commissions.
To choose stock brokerage with full-services firm doesn't make sense if high commission rates and other fees eat up your potential return. If you have a good-sized amount of money, you'll will find the fees well worth it as they offer solid research and investment advice. The firms may also make you aware of opportunities you otherwise would not have heard about. Sometimes, individuals with substantial money wants to reward himself with services such as financial planning.
Once offered nothing but a way to trade with lower commissions, but today they do offer some services such as limited advice and research. However, they may charge a minimum fee on all trades. Discount firm works well for investors who are confident in their own knowledge.
Discount firms enjoy the popularity they do because they have become a middle-of-the-road type of firm, which offers the benefits of lower commission rates while still offering few basic services. The difference between the per-trade commission of a full-service firm and that of a discount brokerage firm can add up to substantial savings. If you want a firm that offers more than the bare-bones deep discount or online brokerage firms offer, you would better opt for the discount brokerage firm.
Deep Discount Firms
They offer little other than a way to trade and some customer service. They offer low or no minimum fees too. Deep discount or online services will serve the purpose for investors who are confident, who want nothing more than a way to trade, who like the idea of no or low minimum investments, who want the lowest fees, and who like the idea of having in complete control.
It is yet another popular option nowadays. It can be either web-based or software-based. Both require the investors to be comfortable with using the computer and to have access to a reliable Internet connections.
Web-based online investing can be right for both casual and active investors, but software-based online investing may be better suited to investors who plan trade actively. In addition, the expensive software keep novice investors away from having to choose stock brokerage of this type.
Note: While trading through discount firms may be done online as well, online investing firms are specifically aimed at only online trading and are in an "online only" category of their own.
As mentioned above there are many types of Brokerage firms. A firm which is good for investor may not turn out to be the same for another. this difference is attributed to some crucial elements involved in the process of trading. some of those are given below:
How much money you have to invest.
The answer to this question, alone, may cut down the list of potential firms later.
Number of trades.
Do you plan to make frequent trades, or making only a few trades a year? You should have strategy in mind. Do you prefer value stocks, growth stocks or a combination? What goals are you hoping to accomplish by investing?
Level of knowledge in stock investing.
If you know very little about investing you should immediately place yourself on your own remedial program and try to learn as much as possible before taking any further steps.
Kind of services that you want.
Are you looking for a full range or mid-level range financial services, or nothing more than someone who will place orders for you.
Also, how comfortable are you using a computer, and do you have access to a reliable internet network?